US embassy cable - 05GABORONE1454

UNCLAS  GABORONE 001454 
 
SIPDIS 
 
 
AF/S FOR MUNCY 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, BC, AGOA, Counter-Terrorism, Labor 
SUBJECT: BOTSWANA ANNUAL AGOA ELIGIBILITY UPDATE 
 
REFERENCE: STATE 170577 
 
1.  Post recommends renewal of Botswana's AGOA eligibility status 
based on its continued compliance with the stipulated criteria. 
As described below, during the year, Botswana took steps to 
strengthen its private sector, improve its capacity to combat the 
financing of terrorism, and prevent child labor. 
 
2.  Country Background Summary:  Botswana is Africa's longest 
continuous multi-party democracy.  It has a population of 1.7 
million, and real 2003/4 GDP was $4.03 billion (Note: The real 
GDP figure is calculated using the Ministry of Finance's figure 
of 19.3 billion pula for fiscal year 2003/4 and converted using 
the average annual exchange rate for the period of 4.7849). 
Approximately half the population is employed in the informal 
sector, largely subsistence farming and animal husbandry. 
Botswana has effectively channeled revenue from mineral wealth 
into human development, giving it one of the highest economic 
growth rates in Africa.  Its economy is highly dependent on 
diamonds. 
 
3.  Comments on Eligibility Requirements 
 
I. Market based Economy 
 
Major Strengths Identified 
      No known investment disputes; nationalization of private 
     property prohibited by law. 
    Open, rules-based trading system complies with WTO 
obligations. 
    Regulatory system is transparent. 
    Limited price controls and price subsidies. 
    Remaining parastatals required to operate on a commercial 
basis; government is committed to privatizing most parastatals. 
      Market-oriented economy with strong encouragement for 
     private enterprise; has achieved and sustained rapid per capita 
apita 
     economic growth since independence. 
    In March 2005, the Cabinet approved a Privatization Master 
Plan. 
      In August 2005, the Cabinet approved a Competition Policy. 
    A Foreign Direct Investment Strategy is currently being 
developed by the Botswana Export Development and Investment 
Authority. 
      Moody's and Standard & Poor's again ranked Botswana an A- 
     rated economy based on its continued macroeconomic and political 
     stability. 
    The 2005 Economic Freedom of the World Report listed 
Botswana as the freest economy in Africa and ranked it even with 
Japan and Spain. 
    Government is targeting international marketing of exports, 
tourism, and investment opportunities in order to lessen 
dependence on mineral revenues, generate more jobs, and alleviate 
poverty. 
    The Government of Botswana is committed to creating a 
regulatory framework favorable to investors.  Foreign investors 
are given equal access to general incentive schemes in all 
in all 
economic sectors, save in those reserved for Botswana citizens. 
    New intellectual property rights legislation largely 
conforms to the TRIPS agreement. 
    Core inflation is low and stable.  In August of 2005, annual 
inflation stood at 9.6%, well above the Bank of Botswana's 4-7% 
target range for the year, fueled by a 12.5% currency devaluation 
in May 2005 and rising fuel, utility, transportation and 
communications prices. 
 
B. Major Issues/Problems Identified 
      Heavily dependent on diamond sector (79.9% of exports in 
     2004), vulnerable to market sentiment; needs to diversify 
     economy. 
    Rising unemployment. 
    Recently, recurring budget deficits have undermined 
development spending on new infrastructure projects and resulted 
in a freeze of government hiring, which makes up roughly 40 
percent of formal sector employment. 
    Lacks privatization legislation, which slows implementation 
of privatization master plan. 
 
 
II. Political Reforms/Rule of Law/Anti-Corruption 
 
tion 
 
A. Major Strengths Identified 
      A well established record of observing the rule of law and 
     right to due process, and equal protection under the law. 
      Transparency International again ranked Botswana the least 
     corrupt country in Africa in its 2004 Corruption Perceptions 
     Index (Botswana tied for 31st place with Estonia and Slovenia). 
      Political pluralism well established. 
 
    Independent press has a long tradition of candid, unimpeded 
discourse. 
      Active and effective campaign to eliminate corruption and 
     improve efficiency of judicial system. 
      GOB making efforts to reduce overcrowding its prison system. 
    No reports of political prisoners. 
    Government has declared war on corruption and economic 
crime. 
    Government bureaucracy is paid on time and is provided a 
living wage. 
      Botswana hosts the International Law Enforcement Academy, 
     jointly managed by USG and Botswana officials, which provides 
 provides 
     training to law enforcement personnel from sub-Saharan Africa. 
     The curriculum focuses on long term institutional reforms of the 
     law enforcement sector, anti-corruption training, and combating 
     international criminal activities. 
 
B. Major Issues/Problems Identified 
      The judicial system does not always provide timely, fair 
     trials due to a serious backlog of cases. 
    Prison conditions remained poor, due primarily to 
overcrowding. 
    Some citizens still do not enjoy full access to social 
services and remain politically and economically marginalized. 
      Some media professionals complain that the Government has 
     manipulated coverage of the state-owned television station and 
     unreasonably restricts access to information.  . 
 
 
III. Poverty Reduction 
 
A. Major Strengths Identified 
      Legal structures for promoting small/medium enterprises, 
     export oriented industries, and the non-mining sector. 
tor. 
    Poverty reduction inextricably linked to development of 
private sector through foreign and domestic investment. 
    Investment incentives for job-creating industries 
established in traditionally underdeveloped rural areas. 
    Universal access to health care and primary education, with 
schools and clinics throughout the country. 
      GOB attempting to expand rural access to secondary 
     education. 
    Health care spending growing as GOB implements national 
HIV/AIDS control strategy. 
 
B. Major Issues/Problems Identified 
      Despite the dedication of substantial resources to combating 
     HIV/AIDS, the Government continues to face challenges in 
     providing medical care for the growing number of HIV positive 
     Batswana.  HIV/AIDS exacerbates problems of low productivity and 
     poverty. 
      Limited data on poverty. 
    According to the most recent data available (2005), the 
Government estimates that 30% of the population lives below the 
poverty line. 
y line. 
    The implementation of the National Strategy for Poverty 
Reduction pilot program in collaboration with UNDP has been slow 
to take off. 
 
 
IV. Worker's Rights/Child Labor/Human Rights 
 
A. Major Strengths Identified 
      Government generally respects human rights of its citizens; 
     no confirmed reports of political or other extrajudicial killing 
     nor politically motivated disappearances. 
      Has ratified all ILO core conventions, including No. 182 
     (worst forms of child labor) and No. 38 (minimum wage). 
      Constitution provides for the right of association and all 
     workers may join or organize unions of their choice. 
    Detention without bail is highly unusual. 
      Industrial relations system based on a tripartite 
     consultative process. 
    Working with the U.S. Department of Labor and the 
International Labor Organization on two programs designed to 
prevent child labor. 
 
 
B. Major Issues/Problems Identified 
tified 
      Government restricts the right to strike; burdensome 
     arbitration process required by law means few strikes have 
     actually been legal. 
    Domestic violence against women remains a serious problem, 
but one that is difficult to quantify. 
    In January 2002, the Government terminated public services 
to the ethnic San (also known as Basarwa) and other minorities 
living in the Central Kalahari Game Reserve and relocated them to 
 
settlements outside the Reserve.  An NGO representing some of the 
relocated persons has challenged the constitutionality of this 
policy in court.  Hearings in the case continued throughout 2005. 
Reports emerged of government officials harassing and torturing 
some residents of the relocation settlements who were suspected 
of poaching. 
    During the year, the Government deported an academic and 
three journalists.  The Government exercised its right not to 
specify reasons for the deportations other than to cite national 
nal 
security concerns.  One of the individuals, longtime University 
of Botswana Professor Ken Good, was an outspoken critic of the 
Government. 
 
 
V. International Terrorism/U.S. National Security 
 
A. Major Strengths Identified 
      Fully supports U.S. war on terrorism; pledged compliance 
     with UNSCR 1373; party to all international counter-terrorism 
     conventions. 
    Working with U.S. Treasury's Office of Technical Assistance 
to upgrade its anti-money laundering and counter terrorism 
finance capabilities. 
      Does not engage in activities that undermine U.S. national 
     security or foreign policy interests; has supported internationa 
     efforts to combat terrorism. 
      Shares interest in combating transnational threats from 
     Africa, taking steps to stop HIV/AIDS spread, environmental 
     degradation, and trafficking of small arms and illegal drugs. 
      The International Law Enforcement Academy, located in 
     Botswana and jointly managed by U.S. and Botswana officials, 
als, 
     conducts courses on counter-terrorism and related subjects, such 
     as arms smuggling, for law enforcement personnel from sub-Sahara 
     Africa. 
 
B. Major Issues/Problems Identified 
      Botswana's rudimentary travel documents are easily forged. 
 
 
Summary and Recommendation 
 
Botswana has manifested its commitment to the principles 
underlying the AGOA eligibility criteria by maintaining and 
expanding its compliance with them in the past year.  The GOB 
continues its efforts to diversify and liberalize Botswana's 
economy and to distribute the benefits of the resulting economic 
growth to the least advantaged sectors of society.  Botswana's 
track record on human rights and rule of law arguably exceeds any 
in Africa.  Botswana's achievements in these areas should be 
recognized through the renewal of its eligibility to participate 
in AGOA. 
 
CANAVAN 
 
 
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